Online published on 28 February, 2020.
The forces of globalization, financialization and commoditization are rapidly changing the global business landscape. We are in an age where companies are struggling to reinvent their strategies. The focus is increasingly shifting to a new competitive advantage known as innovation. Innovation is agreed to be a process by which an idea or an invention can be translated into a good or service for which people will pay. To qualify as an innovation the idea must be replicable at an economical cost and must satisfyaspecific need. Industrialrevolution marked the beginning of modern day innovations in organizations. Lastly, the innovation management program should also have a deterministic or order either through a structure or process so that new products can come out in a time and resource bound manner. Through a case study approach the objectives of this research have been a) to study innovation management process that is practiced in a real time organizational environment (Samsung Electronics and Biocon). b) to study how innovation management follows the underlying properties of achaotic system with respect to organisations andc)to studytheelements of “Order”and “Disorder” in the innovation management program in organization. Open ended interviews were also conducted with some of the senior executives of Samsung Electronics and Biocon. Both the organizations belong to sectors (technology and pharma biotech) where over the years the intensity of R&D spending have been highest as compared to other sectors.
Samsung Electronics is now an established leader and innovator in consumer electronics, information technology, semiconductors and telecommunication. One of Samsung's strongest assets is its team of talented researchers and engineers. More than a quarter of all Samsung employees around 44, 000 of them work everyday in research and development and that number is expected to surpass 50, 000 by 2010. In 42 research facilities around the world various units of Samsung collaborate on strategic technologies for the future and original technologies designed to forge new market trends and set new standards for excellence. In consumer electronic products there is a visible trend of ever-falling prices across all categories. This is driven by gains in manufacturing efficiency automation and lower labour costs as manufacturing has moved to lower-wage countries especially to China. However contrary to the market trend, it has been observed that Samsung Electronics continues to see manufacturing as a core competence and not a function to be outsourced. Samsung drives cost efficiency in its plants by opening their manufacturing units for competition. This means that the internal units have to compete for Samsung's contracts with external competitors. During 1998–2003, Samsung invested $19 billion in new chip factories and $17 billion in June 2003 for manufacturing facilities for TFT-LCDs over the next 10 years.
Samsung Electronics was established in 1969 and initially focused on black-and-white television manufacturing. In 1974, Korea Semiconductor Inc started South Korea's first wafer-fabrication entity. In 1978, Korea Semiconductor Inc fell into financial difficulties. Samsung Electronics took over the entire company and restructured it as a separate business entity, Samsung Semiconductors. Till 1980’s though the assembly capabilities of Samsung Electronics were improved through large production contracts with partners, its market knowledge and original production design capabilities were still not up to global standards. To plug this gap Samsung adopted the path of innovation through R&D, design thinking philosophy and value innovation program.
Samsung invests almost 5% of its total revenues on R&D. It is further observed that there is a strong correlation between its R&D spend and total revenues. The R square value is very high being 0.92 which implies that the regression is of extremely superior quality. Samsung Electronics has transformed itself from a low end memory oriented firm to a premium electronics company in the last two decades. In 2005, Samsung surpassed Japanese rival Sony for the first time to become the world's largest and most popular consumer electronics brand as measured by Interbrand. In 2006, Business Week rated Samsung as 20th on its list of global brands. This successful transition of Samsung Electronics has been primarily due to the success of its innovation management program. To understand how Samsung has managed to introduce a range of new products and hold on to increasing market share an investigation was done to understand the characteristics of its innovation management program. Here an attempt has been made to analyse the critical aspects of their development in the context of chaotic system.
